The Legal Nature of the Contract of Carriage of Goods: Foreign Experience and Russian Understanding

Keywords: contract of carriage of goods, carriage of goods by sea, obligations on cargo, obligations on vessel.

The transportation of goods is one of the most important elements of international trade. Such transportation is made under many different contractual models with their own specifics. For example, the transportation of goods may be carried out under a time charter, a voyage charter, a charterparty and others. Each of these contracts has its own legal nature, which determines its legal regulation.

This article deals with the contract of carriage of goods as the subject thereof. The contract of carriage of goods is defined in Art. 785 of the Civil Code of the Russian Federation (hereinafter – the CC RF),¹ the contract of carriage of goods by sea is defined in Art. 115 of the Merchant Shipping Code of the Russian Federation (hereinafter – the MSC RF).²

The contract of carriage of goods will be considered first and foremost on the basis of carriage of goods by sea. The choice of the carriage by sea is justified by the following reasons. Firstly, maritime carriage of goods is the oldest and most extensively studied mode of carriage, so it is regulated more extensively in relation to carriage models in other branches of transport law. The carriage of goods by sea is the basis for the regulation of other modes of carriage. Having established the nature of carriage of goods by sea, we will be able to determine the nature of the other modes of carriage as well. Secondly, most of world trade is carried out by sea.³ Nevertheless, we will refer to other modes of transportation when their regulation contains features important to the present study.

The necessity of studying the legal nature of the contract of carriage is due to the fact that the carrier’s liability is limited. The limitation of liability, in turn, is only possible if the boundaries of the relevant contract are fully defined. Currently, there is no unified approach to the features of such type of contract and, therefore, the nature of this contract in Russian law. This uncertainty is of practical importance primarily because of the ambiguity of judicial practice.

The purpose of this article is to establish the legal nature of the contract of carriage. If this objective is achieved, we will be able to draw conclusions regarding the characteristics which make it possible to distinguish the contract of carriage from the other contracts (time charter, voyage charter and others).

In the present article, the legal nature of the contract will be established on the basis of three elements: the economic purpose of the relationship arising from the contract in question; the subject matter of the contract (i.e., the rights and obligations of the parties); and the parties’ liability under the relevant contract.

The economic purpose is the most important part of any civil law obligation, since civil law, as a social institution, is nothing more than the formalisation of the relationships arising between the parties to an economic turnover. It aims to find a balance in such relationships.⁴ Ignoring the economic purpose of the contract may lead to the fact that a regulation of the contract will not correspond to the realities for which such a contract was created. Therefore, it will not be used by the parties, and the parties will seek ways to avoid applying the relevant rules. Civil law will then fail to fulfil its primary purpose – to regulate the parties’ relations.

The subject matter of an obligation, in turn, consists of the rights and obligations of the contractual parties. In this article, the subject matter of an obligation is defined with a focus on its characteristic performance, as it is this performance that determines the legal nature of the contract.

A study of the grounds for liability for breach of contract will make it possible to determine the legal nature of the contract of carriage in their actual implementation. The legal regulation of a particular contractual relationship only realises itself if there is a dispute regarding under the contract terms and conditions. The purpose of civil law is to find a balance between the interests of the parties involved in civil turnover,⁵ if there is no dispute between the parties, there is no need to seek such a balance. In this case, we apply the following logic: if a person is liable for the failure to fulfil an obligation under a contract, such an obligation characterises contract legal nature.

I. The Economic Purpose of the Contract of Carriage and its Correspondence to the Legal Regulation

Trade in its traditional sense involves the transfer of goods from one person to another. Such a transfer cannot, in most cases, take place without delivery of the goods. Depending on the terms of the contract, either the seller or the buyer arranges for the transportation of the goods. The transportation of the goods is carried out under any economic transaction involving the transfer of the goods.⁶

In this case, the main purpose of the carriage is usually the safe delivery of goods from one place to another in fulfilment of other contracts (delivery, sale, lease and others) or the separate delivery of goods where the shipper and the consignee are the same person. The legal arrangements for such activities may be different.⁷

The main economic characteristic of the carriage of goods by sea in relation to other contracts, under which the transport of goods is carried out, is that the relationship with the carrier is not mainly relating to the vessel but related to the cargo itself. In other words, from the economic point of view, it is the delivery of the cargo that is essential in the contract of carriage. Circumstances relating to the means of transport may be relevant, for example, in the case of provision of a vessel which does not meet the seaworthiness requirements and therefore the carriage cannot be made⁸.

Carriage should be distinguished from a contract of hire of a vessel by the existence of a bill of lading for the goods to be handed over to the carrier. The relationship between the persons in the bill of lading is regarding the cargo and should be economically qualified as carriage.

The bill of lading is the main document defining the relationship between the carrier and the shipper. It contains information regarding the transport, the cargo and the places of departure and destination.

In the carriage of goods, in addition to the bill of lading, there may be a contract of carriage itself which defines the relationship between the shipper and the carrier. The bill of lading, in its turn, is binding not only on the shipper and the carrier but also on the carrier and the consignee; the contract is applicable to such relations only if the bill of lading expressly states that (Art. 119 of the MSC RF).

Since the main object in respect of which the contract of carriage is concluded is the cargo and not the mean of transport, we shall conclude that the shipper under the contract of carriage does not care which person will actually perform such carriage, therefore there is no general requirement for personal performance of the contract of carriage.

In this case, on the basis that economically the contract of carriage is concluded for the goods and not for the vessel, the carrier under such a contract may be either the carrier actually performing the carriage of the goods or the carrier not performing such carriage itself, i.e. the contractual carrier.⁹ The relationship between the contractual carrier and the shipper does not differ in its economic nature from the relationship between the carrier, actually carried out the transportation, and the shipper.

The contract with the carrier may contain the possibility of changing the destination, an indication of a particular carrier or a particular vessel to carry the goods in question. However, such instructions are minor as regards the obligation to carry the goods safely. It is unlikely that a contract may be considered as breached and it is possible to seek for recovery of damages if the goods have been delivered safely but the terms of the contract regarding a particular carrier have been breached (unless such a term has been specified by the parties as a condition)¹⁰ since the party does not suffer a breach of its economic interest.¹¹

Therefore, the economic purpose of the contract of carriage is to transport the goods to their destination. Terms regarding the manner, type and subject matter of the actual carriage are of no significant economic importance, unless these have been highlighted by the parties as such, or such terms significantly impair the economic interest of the party¹².

II. Subject of the Contract of Carriage

In the main part of this article, we will consider some features of the legal regulation of the carriage of goods taking into account the maritime law in different countries and international legal regulation and define the subject matter of the contract of carriage in Russia.

England. In English law, because of the wide application of the principle of freedom of contract, the essential terms of the contract of carriage are determined by the parties themselves, depending on the purpose of the obligation in question and its characteristics. This principle also applies when the contract terms have been formulated in accordance with long-established practice.¹³ The specific contract and the specific parties’ obligations arising from it are matters. In this context, it is difficult to determine any generally accepted essential terms of the contract of carriage.¹⁴

Strictly speaking, in English law there is no such category as a “contract of carriage”. The obligations of carriage may be defined as the obligation to bail the goods during their carriage (bailment). A contract of carriage contains two documents: a charterparty and a bill of lading¹⁵. The charterparty is an agreement between the carrier and the shipper regarding the vessel. It defines the parties, the conditions of the vessel provision, its quality and other circumstances related to the vessel.¹⁶ Bill of lading is a transport document concluded at the stage of the contract performance. This document relates to the cargo and defines its quality, quantity and other characteristics. At the same time, the said document may also contain contractual terms and conditions regarding the carriage itself.¹⁷ The terms and conditions of the bill of lading are binding and take precedence over the terms and conditions of the charterparty¹⁸ since the written terms and conditions of the bill of lading are accepted by the parties after the charterparty conclusion.

Therefore, in English law, carriage is contained of two main documents – a contract between the carrier and the shipper (charterparty) and a transport document (bill of lading).

There are three main types of the charterparty: demise charter, time charter and voyage charter. A demise charter is used by parties mainly for tax purposes and therefore it is relatively rarely used.¹⁹ So, we will focus on the two remaining types of charter: time charter and voyage charter.

A time charter contains the obligation regarding the use of the vessel’s volume, and the main feature of this contract is that the risk of time delay is borne by the charterer, as it pays for the time the vessel is available for the carriage of cargo.²⁰ A voyage charter, on the other hand, regards the same use of the vessel’s volume, but the payment is made according to the quantity, weight and other circumstances related to the cargo.²¹ In a voyage charter, the shipper undertakes to pay for the transportation of the cargo from the place of departure to the place of destination, not for the time of the vessel’s use. In addition, the demurrage provisions of a voyage charter also become significant,²² as the shipper does not pay for the time, but for the specific voyage.

If the cargo has been loaded below the contractually agreed volume, the carrier is entitled to claim full freight as if the cargo had been loaded to the full agreed volume. This phenomenon is called “dead freight”.²³ “Dead freight” is mainly charged specifically under voyage charters, as its existence is due to the fact that the contract price is formulated in accordance with the volume of the vessel which deals with the cargo.²⁴ In time-charter contracts, the “dead freight” condition fades into the background, as in the said type of charter the main characteristic is that payment is made for the time and the volume is hired, rather than the actual volume of cargo on board. The existence of “dead freight” confirms the nature of a voyage charter payment as a payment for the volume reserved for the transportation of the agreed cargo.

The main distinguishing characteristic of the subject matter of the various types of charters in English law is that they are concluded specifically in relation to the ship, i.e., providing its volume for the carriage. While the cargo terms are either part of such a contract or are expressed in a bill of lading and constitute an obligation to bail the cargo (bailment).

It should be taken into account that such a legal construction reflects the economic purpose of transporting cargo from one place to another. This purpose is expressed both in the standard wording of charterparties,²⁵ and in the nature of the bill of lading as a document reflecting the second fundamental part of the carriage – the obligations on cargo.²⁶

Germany. § 407 of the German Commercial Code (HGB)²⁷ defines the contract of carriage through the carrier’s obligation to deliver the goods. It is important to note in this definition that the carrier’s obligation is determined by the need to deliver the goods and not by the provision of a vessel or other means of transport. The consignee may, however, require the carrier to deliver the goods to him (§ 421 HGB). Some authors even note that the carriage of goods within the meaning of § 407 may be carried out without the use of any means of transport.²⁸

In this context, there is a clear difference from the English approach to the definition of carriage not through two related obligations (provision of the volume of the vessel and performance of the carriage of the goods) but through a separate obligation to deliver the goods irrespective of the terms regarding the vessel. However, the circumstances surrounding the carriage of the goods relating to the vessel are of course taken into account by the German law.

§ 416 of the HGB stipulates that the carrier is liable to the shipper for damage to the goods in the course of carriage. It should be noted separately that the carriage of goods under German law is a rather narrow obligation which does not cover other services which may constitute carriage economically. For example, loading and unloading of the cargo, although they are part of the carriage in the economic sense, are not part of the carriage, and the presence of such obligations in the charterparty constitutes a “mixed” contract.²⁹

§ 437 of the HGB regulates the position of the actual carrier under an obligation relation between the shipper, the contractual carrier and the actual carrier. The regulation of the actual carriage is formulated in the HGB in line with similar³⁰ provisions of Article 10 of the 1978 UN Convention on the Carriage of Goods by Sea (hereinafter – the Hamburg Rules).³¹ In this regard, the actual carrier may avail himself of all the remedies laid down in the contract between the shipper and the contractual carrier. The contract of carriage applies to this third party (the actual carrier).³²

Therefore, the subject matter of the contract of carriage in German law is defined through the obligation to transport the cargo. This obligation is highlighted by the authors as a distinctive feature of the contract of carriage. The carriage of goods from the place of departure to the place of destination is the main characteristic of the contract of carriage in Germany, which forms it as a separate contract.³³ At the same time, the obligations on the vessel are completely removed from the subject matter of the contract of carriage in Germany.

France. In French law, the subject matter of the contract of carriage is defined through the carrier’s obligation to deliver the goods from one place to another.³⁴ The proper performance of this duty is the delivery of the goods to the port of destination in proper condition in accordance with the terms of the contract.

The obligation to carry goods is, in turn, divided into two parts: the obligation to transport the goods (l’obligation de déplacement) and the obligation to deliver them (l’obligation de livraison).

Pursuant to the obligation to transport the goods, the carrier is obliged to transport the goods to their destination, and in the course of such transport he undertakes an obligation to take care of the cargo.³⁵ Since the obligation from the contract of carriage is an obligation of result,³⁶ there is a presumption that the carrier is at fault for the said breach arises in the event of damage to the goods in the course of carriage.³⁷ With some assumption, such an obligation may be attributed to an obligation on vessel since the possibility of transporting the goods is determined by the condition of the vessel, the readiness of the crew and other circumstances. However, it is the cargo, its condition and safety and not the quality of the vessel which is decisive in this case.

In turn, the obligation to deliver the cargo is expressed by the need to consign the cargo to the consignee³⁸ . This obligation may be defined in the relationship between two phenomena: the arrival of the vessel at the destination, which is the end of the transportation (or the obligation to transport the cargo), and the consignment of the cargo to the consignee, which is the end of the delivery. Consignment of the goods to the consignee and accepting them is the fulfilment of the obligation to deliver the goods.³⁹ This obligation determines the contract of carriage.⁴⁰

Therefore, the carrier’s obligation in the carriage of goods may also be divided into two parts: the part relating to the vessel and the part relating to the cargo. However, it is the result of the carriage (i.e., the delivery of the cargo to the consignee and its acceptance) which forms the essential part contract of carriage in understanding of French law.⁴¹ In contrast to the English law, in France, the obligations concerning the cargo and the vessel are not clearly distinguished. The French approach, on the other hand, differs from the German law because it includes in the concept of carriage an obligation on the vessel although such an obligation has no independent role. The contract of carriage under French law may be described as “an obligation on carriage which includes an obligation on the vessel”.

Russian law. Art. 785 of the CC RF defines the contract of carriage through the carrier’s obligation to deliver the cargo entrusted to him to its destination. The judicial practice interprets this provision of the CC RF literally, without expanding the subject matter of the carriage of goods.⁴² The relationship under the contract of carriage arises between the carrier and the shipper.

Russian legal doctrine defines the subject matter of the contract of carriage as the actions of the carrier in transporting the cargo from the point of departure to the point of destination and its consignment.⁴³ In this case, we see that the subject matter of the contract of carriage follows the continental tradition and is divided into two components. The essence of the contract of carriage is the cargo. Some authors even pointing out that the relationship under the contract of carriage arises over a particular cargo, calling the relevant contract “carriage of particular goods”.⁴⁴

Some authors point out that the contract of carriage is a complex tripartite agreement between the shipper, the carrier, and the consignee,⁴⁵ as the consignee has rights and obligations arising from such a contract, i.g., the obligation to accept the goods. This position appears to be disputable. Firstly, the wording of Art. 785 of the CC RF does not involve a third party in a contract of carriage. It is also confirmed by judicial practice.⁴⁶ Second, the contract of carriage is concluded between the carrier and the shipper, and, accordingly, the obligation under such a contract arises between these parties (Art. 308 of the CC RF). At the same time, the obligation to accept the goods from the consignee is not based on the contract of carriage per se but on the bill of lading which, in this situation, is a security and certifies the consignee’s right to possession of such goods. The obligation to accept the goods or the consignee’s other obligations, in turn, are based on the law.⁴⁷ This circumstance is significant because it is the shipper and not the consignee who has a contractual claim against the carrier. The consignee as the owner of the cargo under the bill of lading⁴⁸ has other claims – the property claim (Art. 301 of the CC RF)⁴⁹ and the tort claim (Art. 1064 of the CC RF).⁵⁰ In this context, we should rather talk on the possibility of recognising the contract of carriage as a contract in favour of a third party – the consignee.⁵¹ However, even this approach cannot be taken without reservations.

In characterising the contract of carriage, a number of authors note that the said contract is a real contract.⁵² This approach may be called generally accepted in Russian doctrine. Nevertheless, such a conclusion is controversial.

A real contract is a contract in which the time of formation of the contract coincides with the time when performance begins. Under the construction of a real contract, the party making the characteristic performance may refuse to perform such “obligation” at any time before the performance begins, as there is no contract before that time. At the same time, the party who makes the monetary performance may refuse to accept the characteristic performance from the other party for the same reasons, there is no contract.

In favour of the reality of the contract, the position is expressed in the doctrine that the contract of carriage is deemed to be concluded from the moment the bill of lading is issued.⁵³ However, this approach limits the subject matter of carriage by excluding the circumstances regarding the vessel since the provision of the vessel is carried out before the cargo is accepted for carriage. At the same time, it should be born in mind, the acceptance of the cargo for carriage is the moment of the contract conclusion in the real agreement model.⁵⁴ If the contract of carriage is deemed to be a real contract, the terms for the provision of a specific volume of vessel for the goods or the provision of the vessel necessary for the carriage of the goods, concluded before the issue of the transport document, fall outside the contract and become a “preliminary contract” since “reservation of space on a vessel followed by the carriage of goods cannot be deemed a contract of carriage by sea under a bill of lading since it does not yet give rise direct obligation to transport the cargo to the consignee under a bill of lading in the absence of a formalized bill of lading (italics mine – B.K.)”. However, such a narrowing of the meaning of the carriage to the obligation on the cargo does not seem to be appropriate. Otherwise, any contract may be called a real contract, e.g., a contract of sale may be considered as concluded only at the moment of the handing over of the thing and the conditions agreed between the parties before the moment of such handing over should be considered as a preliminary contract.

In our opinion, in this case the most balanced is the approach of the English law, according to which the function of a bill of lading is not to conclude a contract but to confirm such conclusion.⁵⁵ There are no obstacles to this understanding of the role of the bill of lading in Russia either. This opinion is supported by the wording of Art. 117 of the MSC RF, according to which the existence of carriage of goods by sea may be confirmed by a charter, and by judicial practice.⁵⁶

In Russia, the contract of carriage contains only the cargo obligation and not the vessel obligation. This regulation of carriage allows Russian authors to exclude the vessel obligation from the subject matter of the contract of carriage, referring to its conclusion only at the moment when the cargo obligation arose, i.e., when the bill of lading is issued. However, there is no legislative or doctrinal basis for such a conclusion in Russian law.

Therefore, the essence of the contract of carriage must be the obligation to deliver the goods to the consignee, and a related but binding circumstance is the obligation to provide the agreed vessel or her volume.

III. Liability under the contract of carriage

The determination of the carrier’s liability is important to the question of the nature of the obligation because it characterises the carrier’s obligation through its breach. For example, even if the law does not impose a direct obligation on the carrier to provide a seaworthy vessel within the stipulated time⁵⁷ but the carrier is liable for providing an unseaworthiness vessel, the obligation on the vessel in fact constitutes the legal nature of the contract of carriage.

This paragraph will deal with the carrier’s general grounds of liability to the extent which this determines its essential obligations under the contract. It is important to note that, for the purposes of this article, it is the basis of liability of the subjects of the contract of carriage that is of interest to us. Issues regarding burden of proof and other private questions of liability do not contribute to determining the nature of the contract in question and will not be dealt with in detail within the scope of this article.

England. Like the obligations under the contract of carriage, the carrier’s liability may be divided into two parts: liability for the cargo⁵⁸ and liability for the vessel⁵⁹. In turn, liability for the cargo arises if the goods are undelivered, delivered delayed, or delivered damaged.⁶⁰ The liability for the vessel shall arise if the vessel provided by the carrier is not seaworthy⁶¹ or is not cargoworthy⁶², or if no vessel was provided at all. At the same time, if the shipper has not pointed out a breach of the vessel obligation by the carrier but the cargo has been delivered to the destination safely, the contractual liability for breach of the vessel obligation only does not arise. A breach of the vessel obligation is only possible up to the commencement of actual carriage; thereafter, only a breach of the cargo obligation, i.e., the obligation to deliver the goods safely, may occur.

The cargoworthiness of the vessel may be determined on the basis of her objective capacity to carry the goods concerned, depending on the circumstances of the case. For example, one indication of the uncargoworthiness is that the crew is not prepared for the voyage.⁶³ In general, the carrier’s liability for the worthiness of the vessel is one of the circumstances determining whether it has obligation on the vessel.

The carrier is liable for the goods if such goods have been damaged or not delivered, or have been delivered late, in the course of carriage. With respect to these cases, the main questions are, firstly, who has the right of action and, secondly, to what extent the carrier is liable.

It follows from the privity of contract principle⁶⁴ that the person entitled to a contractual claim against the carrier is the person who concluded the contract, i.e., the shipper. However, a difficulty arises when the consignee (buyer) has already paid the price of the goods to the shipper (seller) and has received the bill of lading. The goods have been damaged in the course of carriage. The shipper has a contractual claim against the carrier, but he has no economic interest to make such a claim since he has received payment for the goods, the bill of lading (possession of the goods) has already been transferred to the consignee. The shipper has fulfilled its obligations. The consignee, however, cannot make a claim against the carrier due to the principle of privity of contract.

The problem of the impossibility for beneficiary under a contract being to make a claim under such a contract is not only encountered under transportation. For example, the Contract (Right of Third Parties) Act 1999⁶⁵ provides for exceptions to the privity of contract whereby a person in whose favour a contract has been concluded has a right to claim against a party to that contract under the contract to which the claimant is formally a third party.⁶⁶

Nevertheless, the exceptions to the privity of contract established by the Contracts (Rights of Third Parties) Act 1999 are hardly applicable to carriage of goods relations.⁶⁷ The contract of carriage may only be qualified as a contract in favour of a third party with large reservations. In the case of carriage, rules on the right of action of the consignee set out in the Carriage of Goods by Sea Act 1992⁶⁸ under which the lawful holder of a bill of lading; the person to whom delivery of the goods is to be made in accordance with that contract; parties to whom the carrier undertakes to deliver the goods⁶⁹ are entitled to make a claim regarding the goods against the carrier.

In the event of a claim, such persons are subject to the provisions of the contract between the shipper and the carrier.

Separately, it should be noted that the provisions of the Carriage of Goods by Sea Act 1992 do not transform the obligation to carry goods between the shipper and the carrier into a three-party obligation; they only give the right to claim to the person who is to receive the goods in question under the bill of lading containing the obligation to carry the goods. Such a phenomenon is an exception to the privity of contract rather than an inclusion of the consignee in the contract between the shipper and the carrier. This understanding of carriage is also supported by the fact that the consignee may make a claim against the carrier only with respect to the cargo obligation, because the obligation under the contract between the shipper and the consignee cannot be discharged in case of a breach of the vessel obligation. This is because the bill of lading is only issued after the carrier has accepted the goods, i.e., after the carrier’s obligation regarding the vessel has been fulfilled. Consequently, the consignee is not a party to the contract of carriage but has a right to make a claim against the carrier for breach of cargo obligation. This is an exception to the privity of contract.

The second important element of the carrier’s liability is its limitation. The carrier’s liability (by way of example of carriage of goods by sea) is limited to actual loss and to a specific amount not exceeding 666.67 Special Drawing Rights (SDR)⁷⁰ per unit of cargo, furthermore, separate rules established by law or practice apply to liability from the contract of carriage, for example, in respect of the limitation period or the claim procedure. These limitations are set out in the Hague-Visby Rules and apply to carriage supporting by the issue of a bill of lading.⁷¹

A special kind of liability, not of the carrier but of the shipper, is demurrage. The nature of demurrage in English law is defined as a contractually agreed amount of losses (damages) which is usually expressed in a rate for a certain period of time.⁷² The possibility of demurrage being charged for vessel demurrage in excess of the standard time (demurrage on demurrage), even if the carrier has given the shipper additional time for loading, unless such agreement expressly provides for the exclusion of demurrage for that period.⁷³ If the contract does not provide for such a rate or the shipowner does not wish to collect demurrage, e.g., because the contractual time limit for demurrage has expired, the amount to be paid by the shipper shall be classified as damages for detention, and the carrier shall prove its fact and amount.⁷⁴ The existence of this type of liability, such as demurrage, suggests that not only does the carrier have an obligation to provide a proper vessel, but also the shipper has an obligation to load a cargo to the vessel within a given time limit.

Therefore, liability in a contract of carriage, according to the subject matter of the obligation, may arise with respect to two things: the vessel obligation and the cargo obligation. The carrier’s liability in respect of the vessel is based on the charterparty and in respect of the cargo on the bill of lading and the terms of the contract itself. This bill of lading also applies to the consignee, a third party to the contract of carriage.

If the carrier under the contract of carriage does not perform the carriage himself, he is deemed to be a contractual carrier. The shipper has the right to claim against the contractual carrier. The contractual carrier is liable to the shipper for both the vessel and the cargo obligations, as he assumes the corresponding obligations.⁷⁵ The main question is whether the actual carrier is liable to the shipper or the consignee in case of a breach of the cargo obligation. English law gives an affirmative answer to this question, and the claim against the actual carrier can be either tort or proprietary. However, it must be borne in mind that if an action is brought against the actual carrier, such carrier is subject to the terms of the bill of lading issued by the contractual carrier to the shipper⁷⁶ . If, however, both the contractual carrier and the actual carrier are liable under the contract of carriage, their liability is joint and several liability⁷⁷ .

Germany. § 425 HGB stipulates that the carrier shall be liable to the consignor for damage to the goods during carriage or for delay in its delivery. If the damage to the goods has been caused by the conduct of the consignee or shipper, the carrier’s liability shall be reduced in proportion of the effect of such conduct on the amount of losses. At the same time, the carrier’s liability arises only if the damage could have been avoided if it would exercise greater care (§ 426 HGB).⁷⁸ Furthermore, the carrier’s liability is limited to the value of the goods at the time and place of acceptance of such goods for carriage (§ 429 HGB).⁷⁹

The carrier’s liability under German law is quite clearly regulated according to its legal or contractual obligations.⁸⁰ Such obligations, as noted above, relate to the goods, i.e., the obligation on the vessel in the German model of the contract of carriage is not covered by the subject matter of the contract and therefore liability for breach thereof does not arise. The issues of the vessel obligation are not regulated at all in the relevant of HGB.

However, within the maritime transportation, the carrier’s liability, apart from national regulation, is determined by international law, namely the Hague-Visby Rules and in some cases the Hamburg Rules.⁸¹ They contain grounds for imposing liability on the carrier in case of provision of a vessel which does not meet the seaworthiness requirements.

§ 428 HGB set out that the carrier is liable for the acts of persons it engaged to the shipper as if they these acts were down by itself. This is the general principal of the contracting party’s liability for the acts of persons it engaged. This establishment of the carrier’s liability, in particular, indicates the possibility of imposing the performance of his obligations on another person. In other words, in this obligation it does not matter who specifically performs the obligation to carry the goods, unless this is expressly laid down in the contract.

The shipper and/or consignee have a right to claim against the actual carrier (§ 434 HGB). This claim is extra-contractual in nature, but the actual carrier may use the remedies set out in the contract between the shipper and the contractual carrier, unless the damage or delay was caused by the actual carrier’s own fault or gross negligence, It is impossible to refer to the liability limitation if the damage was caused by the fault or gross negligence.⁸² If both the contractual carrier and the actual carrier are liable, their liability is joint and several (§ 437 HGB).

The liability of the carrier in Germany is limited pursuant to rules set out in the international conventions.

France. Under French law, liability arises for failure to fulfil the carrier’s obligations to transport and deliver the goods. However, under French law, the breach of these obligations is considered a material breach for which liability cannot be excluded by the contract.⁸³

As already stated, the obligation under the contract of carriage in French law is an obligation of result. Consequently, in the event of damage to the cargo during carriage or a delay in its delivery, the carrier bears the burden of proving the absence of such a breach⁸⁴ (article L. 133-1 of the French Code Civile; the FCC)⁸⁵. The Carrier shall be liable in the event of damage to the cargo or delay in its delivery, unless it proves that such breach of contract was caused by force majeur.

The FCC does not limit the possibility of performing carriage by hiring an actual carrier. Moreover, case law assumes that the possibility of hiring an actual carrier is implicit in the nature of the performance of the carriage and that the exception to such possibility shall be provided for in the contract directly.⁸⁶ The same judgement states that if the shipper has prohibited the use of an actual carrier to carry out the transportation, such an actual carrier has no right to claim the payment from the shipper⁸⁷ but no additional liability is incurred by the contractual or an actual carrier. This solution reveals an important feature of the French liability regime for the carriage of goods, it is determined by the cargo and arises in case of damage or delay in delivery, but a breach of ancillary circumstances, such as the obligation to provide contractual carrier’s own transport, is not a basis for liability.

Russian law. In Russia, the carrier’s liability is defined under two obligations: the obligation to provide the vessel stipulated in the contract of carriage and the safe delivery of the cargo to its destination (Articles 794 and 796 of the CC RF, Articles 115 and 124 of the MSC RF). In this context, the provisions on carriage come into conflict with the understanding of carriage in Russian doctrine (as an obligation solely about cargo arising at the moment the transport document is issued)⁸⁸ . Therefore, for example, despite the wording of Article 166 of the MSC RF, which does not mention the unseaworthiness of a vessel as a basis for the carrier’s liability under the contract of carriage, judicial practice has concluded that the carrier’s liability exists when a seaworthy vessel is not provided. Such liability is due to the fact that the shipper may withdraw from the contract of carriage and demand repayment of the advance as unjust enrichment and losses due to the carrier’s breach of its obligations⁸⁹ .

The carrier’s liability provisions demonstrate the true nature of the contract of carriage which is divided into two parts: an obligation on the vessel and an obligation on the cargo. The carrier’s liability is presumed in the event of damage to the cargo in the course of carriage; it is up to the carrier to prove the circumstances relieving him of the liability (article 166 of the MSC RF, article 116 of the Air Code of the Russian Federation⁹⁰ , article 115 of the Inland Water Transport Code of the Russian Federation⁹¹, etc.).

In addition, the carrier’s liability in Russian law is limited under rules set out in the international law, limited amount of the carrier’s liability applies, and under the regulation of other subsidiary rules, for example, a shortened limitation period.

As regards the relationship between the actual carrier and the shipper, it is more controversial. The relationship between these persons must be governed by tort law because there is no direct contract between these persons. However, the application of tort law to such relations raises a number of problems, primarily related to the impossibility of applying limitations on the carrier’s liability.

For example, the provisions of Article 173 of the MSC RF stipulate that “...if the performance of carriage of goods or a part thereof is entrusted to the actual carrier, even if (italics mine – B.K.) it is permitted by the contract of carriage of goods by sea, the carrier is nevertheless liable for all carriage in accordance with the rules set out in this paragraph”. There are two interesting details in this definition of the relationship between the shipper and the actual carrier. First, it is the contractual carrier who is liable for the whole carriage of the goods and who may apply to the actual carrier if he was at fault for the damage. This regulation is quite in line with the approach to the liability of the debtor for the persons who have been hired by it to fulfil its obligation (Art. 403 of the CC RF) and does not raise any special questions. Secondly, the word “even” is used regarding the possibility of involving of an actual carrier in carriage of goods relations⁹² which implies that, as a general rule, the involving of an actual carrier in such relations is not provided for. This approach clearly diverges from the international trend, including within the framework of international law (Art. 10 of the Hamburg Rules). The contrast between Russian and French regulation is also noteworthy; while the French Court of Cassation states the possibility of including conditions of personal performance of the contract of carriage in the contract, Russian law specifically provides for the possibility of including an actual carrier in the carriage.

In this context the question arises: is it possible to bring a tort claim against the carrier in the absence of any contractual relationship with him? In our opinion, there are no obstacles to make non-contractual claims against the carrier under Russian law, which is also reflected in judicial practice.⁹³ It is also economically feasible to provide participants in the transportation chain with a tort claim because it is not always the case that a party to a particular contract of carriage has an economic interest in claiming the carrier, whereas a third party to such contract, such as the consignee, may have such an interest.

At the same time, in the case of a tort claim against a carrier it is debatable to apply the criterion of a source of increased danger to a vessel (Art. 1079 of the CC RF), a longer limitation period (three years instead of one), change of jurisdiction (exclusive jurisdiction for claims from transportation is established at the location of the carrier, para 3 of Art. 38 of the Commercial Procedural Code of the Russian Federation)⁹⁴. All this suggests that liability under the contract for the carrier becomes less significant than liability for damage. This, in turn, contradicts the nature of tort liability.⁹⁵

In our opinion, in view of the absence of detailed rules on carrier’s tort liability and the fact that the shipper’s relations with the actual carrier are regulated only if the contract of carriage provides for the actual carrier’s liability (Art. 173 of the MSC RF), Russian judicial practice should seek ways out of the current legal vacuum. One way out could be the implementation of international law establishing the functions of a bill of lading (the Hague-Visby Rules) and the joint and several liability of actual and contractual carriers (Art. 10 of the Hamburg Rules).

Therefore, if the actual carrier has breached its obligations on the cargo, its liability should be determined in accordance with the contractual liability of the carrier under the bill of lading and all limitations established for the carrier’s liability under the contract should be applicable. At the same time, the liability of the actual carrier shall meet the criteria of tort liability under Art. 1064 of the CC RF without applying the provisions regarding source of increased danger (Art. 1079 of the CC RF). Such conclusion proceeds from the fact that tort liability shall not be more severe than the contractual one in an economically similar relationship.

However, if the goods have been damaged by the actual carrier and there are grounds for a tort claim against it, the contractual carrier who has undertaken the obligation in question and who has given a guarantee for its performance cannot be released from liability for its breach (Art. 403 of the CC RF). In such a case, the contractual carrier shall also be liable for the damage to the cargo caused by the actual carrier. Their liability must be joint and several since the damage caused to the cargo in such a case is caused to a single economic interest of the cargo owner.⁹⁶

Therefore, the carrier’s liability provisions make it possible to conclude that, firstly, the carrier assumes the guarantee of cargo delivery and is liable for damage thereto or delay in its delivery unless he proves that such damage resulted from circumstances which he could not overcome; secondly, along with the contractual carrier, the actual carrier is liable to the shipper for breach of cargo obligation (but not the vessel obligation), their liability is joint and several. In addition, all limitations of liability imposed on the carrier, including those imposed on the carrier by the contract (extension of the contract to third parties)⁹⁷, shall be applicable to the actual carrier.

Conclusion

Based on the above, the following conclusions should be drawn regarding the legal nature of the contract of carriage.

The economic purpose of the contract of carriage is to deliver the goods from the place of departure to the place of destination. In foreign jurisdictions, the contract of carriage is of a dual nature, containing both the cargo obligation and the vessel obligation, except in Germany where the vessel obligation is excluded from the contract of carriage. However, the essence of the contract of carriage in all of the legal systems analysed is the cargo obligation, the control of the cargo shall be evidenced by the bill of lading.

In Russian law, it is generally accepted that the subject matter of the contract of carriage is the cargo obligation exclusively. However, a closer examination of the regulation reveals that the contract of carriage also includes a vessel obligation in the French sense of this institution, i.e., the cargo obligation which includes a vessel obligation. The liability under the contract of carriage, according to the subject matter of the relevant obligation, may also be imposed for breach of the cargo obligation and the vessel obligation, subject to its dependence on the actual or future safety of the goods. ■