Meaning
An international convention defines the liabilities and rights of carriers of goods by sea under a bill of lading. These standards, known as the Hague-Visby Rules, establish a minimum set of obligations that ocean carriers must fulfill when transporting cargo. The treaty applies to contracts of carriage where the bill of lading is issued in a contracting state.
Carrier Obligation
Shipowners must ensure that their vessels are seaworthy before the voyage begins. The Hague-Visby Rules require the carrier to properly equip and supply the vessel. The carrier must also make the holds fit and safe for the reception of cargo.
Compensation Limit
Financial liability for damaged cargo is subject to specific international limits. Under the Hague-Visby Rules, the limit is set at a specific number of special drawing rights per package or per kilogram of gross weight. This mechanism protects carriers from unlimited liability while providing cargo owners with a clear baseline for recovery, allowing them to calculate potential financial exposure before shipping.
Exempted Risk
Certain circumstances relieve the carrier from liability for losses occurring during the voyage. If damage is caused by fire or act of war, the carrier is not held responsible. This exemption protects the shipping industry from risks beyond their control.
