4. CARGO INTERESTS' COMPLAINTS.

It is apparent from the outline which has been traced thus far that bills of lading are the foundation of overseas trade. By reference to these documents the responsibilities and rights of both shipowners and shippers are determined. On the basis of bills of lading are established, through bankers, the credits necessary for the financing of mercantile contracts. According to the terms of bills of lading, the risks of carriage (including risk of loss by pilferage) are shared between the immediate parties, and by them for the most part insured with underwriters. Everyone interested at all in commerce overseas is therefore deeply concerned in bills of lading and in the terms they contain, or should contain, and any question regarding those terms is not merely one of form but of substance.

There is an apparent, though not a real, divergence between the interests of senders and receivers of goods as to the terms of bills of lading. The rate of freight charged by the carrier must depend in part on whether, under the bill of lading, the goods are carried at owners' or at carriers' risk. As the sender of goods is interested in obtaining a low freight, he will usually be inclined to accept owners' risk conditions. The person who is to receive the goods, on the other hand, is more interested in their safe arrival in good condition, and therefore will be inclined to favour carriers' risk conditions in the bill of lading. Higher freights must be reflected, more or less, in higher prices, and so both sender and receiver of goods have really the same interest in a contract being

made for safe carriage at the lowest possible market rate of freight. The sender of the goods, however, actually makes the contract with the carrier. His primary interest in securing a low freight is apt to govern his action. Accordingly he does not concern himself closely with the conditions, and so shipowners gradually tightened their negligence clauses as we have seen.

The complaints of the cargo interests against this policy were thus summed up in a recent statement by Mr. Charles S. Haight, Chairman of the Bill of Lading Committee of the International Chamber of Commerce :

1. That carriers have unfairly exempted themselves from practically all liability for the faults of their servants in the stowage, custody and delivery of cargo by negligence clauses, or, where such clauses are prohibited by law, have limited their liability to a wholly inadequate figure-$100 or less per package.

2. That carriers have unfairly evaded the payment of just claims by bill of lading stipulations requiring claims to be presented within an impossibly short period.

3. That carriers have evaded the payment of claims for pilferage and similar losses, and have even encouraged such losses by casting an impossible burden of proof upon cargo owners.

4. That carriers have improperly stipulated in their bills of lading for the benefit of insurance effected by the shippers.

How these complaints have been met by the Hague

Rules will be seen later (see p. 31). They have been partially met by legislation, but the restrictions on the insertion of negligence clauses in bills of lading instituted in various countries are lacking in uniformity, and in other respects also are defective.

5. COUNTRIES ALLOWING FREEDOM OF CONTRACT. The state of affairs resulting from the policy pur, sued by British shipowners was summarised in the report dated February, 1921, of the Imperial Shipping Committee (a document more particularly referred to later on), as follows: "By the Common Law of England the shipowner is responsible for the safe carriage and delivery of goods committed to his charge as a common carrier, unless prevented by certain definite causes such as the Act of God or the King's enemies; but there is nothing in English law to stop him from contracting out of the whole or any part of his liability, and, by a practice which has gradually extended since about 1880, British shipowners do habitually in their bills of lading contract themselves out of their Common Law liability to a large extent."

The Committee added in their report that, “although shipowners protect themselves in their bills of lading from legal liability, yet the practice among many of them is, in fact, to pay reasonable claims for loss or damage to goods. Such practice is not, however, universal."

In France, Sweden, and Norway the legal position has, it appears, hitherto been very much as in the United Kingdom.

In Germany the largest shipping companies, as the outcome of agreement between them and shippers, adopted before the war a bill of lading which accepted on behalf of the shipowners the carriers' risks.

6. COUNTRIES PROHIBITING EXEMPTION CLAUSES.

In America freedom of contract as between the parties to a contract for the carriage of goods by sea was narrowed by judicial decisions, and, since the passing of the Act of Congress, commonly known as the Harter Act,* in 1893, the insertion by shipowners of clauses exempting them from liability has been prohibited by statute.

The Harter Act, while exempting a shipowner who exercises due diligence to make his ship seaworthy from liability for damage or loss resulting from what may be shortly described as navigation risks, prohibits him from inserting in any bill of lading or shipping document any clause relieving him from liability for what may be termed carriers' risks-that is, from liability for loss or damage arising from negligence, fault, or failure in proper loading, stowage, custody, care, or proper delivery of merchandise. The Act applies to ships transporting merchandise from or between ports of the United States and ports in other countries, and, consequently, its provisions must be incorporated in all bills of lading issued in the United States by a clause declaring the shipment subject to the provisions of the Act. It thus necessarily

* As to the purposes and interpretation of the Act see the “Commercial Laws of the World," vol. vii., p. 494.

becomes part of the contract which any shipowner, of whatever nationality, may make for the carriage of goods from United States ports.

In Australia, New Zealand, and Canada, Acts have been passed resembling the Harter Act in their general features. The most recent of these is the Canadian Water Carriage of Goods Act, 1910, amended by a further Act in 1911.

The Australian Sea Carriage of Goods Act was passed in 1904, and the New Zealand Shipping and Seamen Act in 1908, an amending statute being passed in 1911. Except that the New Zealand legislation is so worded that it apparently applies only to cases brought before the New Zealand courts, the Australian, New Zealand, and Canadian Acts closely resemble each other.

In Japan, the Commercial Code provides that "the shipowner cannot even by an express agreement be exempted from liability for damage caused by his own fault, or by the bad faith or the gross fault of a mariner or of any other person employed, or by the unseaworthiness of the ship" (Report of Imperial Shipping Committee).

7. IMPERIAL SHIPPING COMMITTEE'S REPORT.

A comparative view thus shows a difference between the laws of the various countries which fall into two contrasting groups. Generally speaking, the law merchant is in its principal outlines uniform in all countries, having for the most part developed from common inter